Of the many economies that gorged on debt in the boom years, Dubai stood out. In the space of a few years the emirate’s investment arm, Dubai World, racked up $59 billion in debt, borrowing to build lavish developments like a giant island shaped like a palm tree to entice celebrities like Brad Pitt, and to invest in glittery properties like the MGM Grand Casino in Las Vegas.

The Emirates Towers in Dubai, which has accumulated $59 billion in debt.

Golfers in the shadow of Jumairah Island Towers on Friday in Dubai. Fear that the emirate cannot pay its debt sent the Dow down more than 150 points.

Now that the boom has gone bust, both in Dubai and in the United States, Dubai is stuck with a glut of real estate that no one wants to...